The Department for Work and Pensions (DWP) has confirmed it plans to pay out up to £3,000 to employers in hospitality and retail for each young person they hire as an apprentice.
Work and Pensions Secretary Pat McFadden is today unveiling a £1billion package designed to generate 200,000 employment opportunities for young people, marking what ministers describe as the most significant overhaul of apprenticeships in ten years.
The announcement at Waltham Forest College comes amid stark figures showing apprenticeship starts among young people have fallen by 40 per cent over the past decade.
Nearly one million young people are currently neither earning nor learning, representing an increase of 248,000 between 2021 and 2024.
The DWP has has unveiled major reforms
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The “New Deal” forms part of the Government’s broader commitment to ensure everyone aged 16-24 has access to either employment or education, with total investment reaching £2.5billion over three years to support almost one million young people.
The centrepiece of the package is a new Youth Jobs Grant offering employers £3,000 for each 18-24 year old they recruit who has been claiming Universal Credit and seeking work for at least six months, with projections suggesting this will assist 60,000 young people over three years.
Ministers are also widening eligibility for the Jobs Guarantee scheme, extending it from those aged 18-21 to cover all 18-24 year olds, which is expected to create more than 35,000 additional subsidised positions and bring the total supported through the programme to over 90,000.
Small and medium-sized enterprises will receive a £2,000 incentive for each new apprentice aged 16-24 they take on, a measure intended to drive progress towards the Government’s target of establishing 50,000 additional apprenticeships.
Unemployment in the UK has hit 5.2 per cent | Commons
Work and Pensions Secretary Pat McFadden | GB News
Prime Minister Sir Keir Starmer said: “Backing young people is one of the most important investments we can make in this country’s future. We are determined to tackle the rise in youth unemployment by expanding practical routes into work, boosting apprenticeships, and giving employers the clarity they need.”
Furthermore, the Prime Minister emphasised that the reforms support the Government’s ambition to build an economy benefiting everyone whilst addressing skills shortages.
Mr McFadden said: “These measures will give life-changing opportunities to young people and significantly reverse the increase we inherited in those not in education, employment or training.”
The Work and Pensions Secretary added that the Government is directing funding where it is most needed whilst providing employers with the flexibility and support they have requested.
UK apprenticeships have seen a major spike | GB News
The Government is launching a new 18-month Level 4 apprenticeship focused on AI and automation, with the first participants beginning this month, designed to train workers in identifying cost-saving applications of artificial intelligence and integrating digital systems responsibly.
Mr McFadden is expected to highlight the rapid advancement of artificial intelligence as a key factor driving the urgency behind these reforms during his speech.
Foundation apprenticeships, which currently cover engineering, manufacturing, and digital sectors, will expand into hospitality and retail from April 2026, providing entry-level pathways for 16-21 year olds transitioning from education into permanent employment.
Tina McKenzie MBE, policy dhair of the Federation of Small Businesses, described the package as “a game-changer to tackle youth unemployment and inactivity” and praised the decision to prioritise public funding for small employers offering apprenticeships.
John Foster, the chief policy and campaigns director of the Confederation of British Industry, said: “There is a strong moral and economic imperative for business and government to work together to tackle the rising number of people not in employment, education or training.”